Every Worker Matters

A snapshot of the amendments to the Employment Act that came into effect on 1 April 2019.

Introduction

1 April 2019 was a watershed moment in the legal development of Singapore’s Employment Law. I personally saw our labour movement’s lobbying efforts in pushing the boundaries and championing workers’ rights bearing fruit. It was only in 1 April 2014 that we had just completed a round of tripartite negotiations and saw a string of amendments coming into effect – which included raising the scope of the Employment Act (EA) to cover Professionals, Managers and Executives (PMEs) with a salary cap of S$4500. This latest round saw not merely a raising but a complete removal of this S$4,500 salary cap, thus expanding the coverage of the core EA provisions to all PMEs in Singapore regardless of age, gender, race or nationality. Having been involved in the latest two rounds of amendments and being a member of the tripartite workgroup, I will share my thoughts about the amendments in this article. I will attempt to share some insights into the journey and personal comments moving forward. This article will cover the following:

1. Why we advocated for these amendments;
2. What were the key amendments to the EA; and
3. What I hope to see moving forward.

Part 1: Why Did We Advocate for the Amendments?

The amendments to the EA are outcomes of continuous review, consultation and negotiation amongst the tripartite partners, to ensure the Employment Laws in Singapore are kept in pace with economic growth and the changing workforce profile in Singapore. NTUC and the labour movement strive to look after the interests and welfare of fellow workers. One of the main impetus for this round of amendments is the changing workforce profile and the rising median wages of workers in Singapore.

When the EA was first introduced and enacted in 1968 by then-Minister for Foreign Affairs and Labour, Mr S Rajaratnam, it was done with the intent of protecting the majority of Singapore’s workforce, which comprised largely of rank-and-file workers. Back then, PMEs formed a very small part of our workforce, and thus little need to cover them. Over the years, the EA underwent further incremental changes, to include some managers and executives.

However, the proportion of professionals, managers, executives and technicians (PMETs) in Singapore as at 2018 stands at about 57 per cent of our workforce and still growing rapidly. As such, it is timely to amend the EA and extend coverage (especially the core provisions) to all workers (regardless of salary).

With the removal of the salary cap, there would no longer be a need to dichotomise (core provisions coverage) so clearly between rank and file and PMEs. This amendment, effective 1 April 2019, saw an additional 430,000 employees protected. In the past, I have encountered instances of employers circumventing the EA by utilising the salary cap to exclude protection of certain workers.

In the same vein, besides opening up the scope of the EA, we had wanted to ensure that the EA kept pace with the rising wage levels and to nurture a progressive workplace through further enhancing the protection of rank and file workers and improving the employment dispute resolution framework.

Part 2: What Were the Key Amendments?

Removal of the S$4,500 Salary Cap, Thereby Extending Coverage of the EA to All Employees

As explained earlier, this was the most significant amendment to the EA. Prior to this, the EA’s core provisions governing minimum number of days of annual leave, paid public holidays, sick leave entitlements, and other statutory protections (eg, protection against wrongful dismissal) were only available to PMEs earning up to S$4,500 per month as well as rank and file workers.

There was a serious need to ensure our employment laws not just keep pace but also stay ahead of the changing employment and labour landscape. In this latest round of review, the labour movement had advocated for a review of the salary cap, and seriously considered if the cap should be retained at all. We are glad after months of negotiations and late night discussions, that the tripartite partners agreed that it was time for all employees to be granted protection under the core provisions of the EA so as to raise employment standards and protection of all workers.

During the discussions, there were concerns raised by the Singapore National Employers’ Federation (SNEF) regarding rising business and compliance costs for the changes to take effect, especially in response to the labour movement’s push. To strike a balance, the tripartite partners agreed to restrict the automatic legal right to carry forward unused leave to only employees covered by Part IV of the EA.

This complete removal of the salary cap of S$4,500 with effect from 1 April 2019, is a radical and unprecedented move, given that just a decade ago, PMEs were not even covered under the EA. To add, unions, who used to be halted by companies from representing PMEs by referencing the S$4,500 monthly salary cap, will now have reason to review the scope of their collective agreements as the EA will cover all PMEs and they will also have recourse to the Employment Claims Tribunal (ECT) for wrongful dismissal claims.

Applicability of Core Provisions in the EA

Enhancing Protection of Rank and File Workers

By way of an introduction, before the amendments were made, Part IV of the EA governed rest days, hours of work, overtime pay, for the following groups of vulnerable workers: (i) workmen earning up to S$4,500 per month, and (ii) non-workmen earning up to S$2,500 per month (white collar employees not in managerial/executive positions, eg, clerks, receptionists).

Through our interactions with workers, and union members, we were disappointed to discover that some rogue employers had deliberately and creatively excluded workers from Part IV protection, by either paying them slightly more than the S$2,500 cap or giving them inflated managerial and executive titles. Such practices by the company were designed for costs saving purposes, to deny non-workmen additional overtime pay, and associated benefits. I have repeatedly called upon employers, both in and outside of Parliament, to scrutinise their employment practices to ensure that the workers are not unfairly excluded from Part IV protection.

With effect from 1 April 2019, Part IV of the EA will be extended to cover non-workmen earning up to S$2,600 per month (as opposed to S$2,500 per month previously). Further, apart from the increased scope of employees covered, the salary cap for calculating overtime pay will be increased from S$2,250 to S$2,600. Collectively, these amendments are expected to benefit an additional 100,000 employees.

While it is heartening to note that the tripartite partners have agreed to the increased salary cap from S$2,500 to S$2,600 for the purposes of Part IV protection, there is increasing difficulty on the ground to clearly determine if a worker is a workman or a non-workman, as many forms of work now involve a mix of both manual and non-manual work. In other words, the “PME vs “non-PME” distinction is increasingly blurred as jobs continue to be transformed. In view of this, perhaps Part IV protection may someday be extended to PMEs. However, this will require further discussions between the tripartite partners, and a close analysis of the job market trends in future as Part IV also encompasses overtime payments which will be a “sticky” point as many PMEs currently work beyond their normal working hours.

Protection of Rank and File Workers under Part IV of the EA

Enhancement of the Employment Dispute Resolution Framework

Prior to 1 April 2019 and since the formation of the ECT, it only had jurisdiction to hear salary-related disputes whereas wrongful dismissal claims were heard by the Ministry of Manpower.

With increasing number of PMEs facing wrongful dismissal cases, and also because both classes of disputes were often related (wrongful dismissal claims often came along with unpaid salary issues), the tripartite partners agreed to have a more convenient “one stop service”, where the ECT would now adjudicate both salary-related disputes as well as wrongful dismissal claims. For clarity, wrongful dismissal claims include not only those scenarios where an employee is ‘terminated’, but also where the employee had involuntarily resigned/faced constructive dismissal (eg, employer had made work conditions extremely difficult, denied him of employment benefits, and forcing the employee to resign).

With the transfer of adjudication on wrongful dismissals to the ECT, the Ministry of Manpower (MOM) has also published a set of “Tripartite Guidelines on Wrongful Dismissals”, which set out examples of what constitutes wrongful dismissals, and what do not. This was to further elucidate this new area of coverage by the ECT, so that employees are adequately protected, and employers are not saddled with frivolous allegations. The ECT and High Court are also to take cognisance of this set of tripartite guidelines on wrongful dismissal when presiding and deciding over any wrongful dismissal claims.

Additionally, the qualifying period for managers and executives to lodge a claim for wrongful dismissal would be reduced from 12 months to six months. The tripartite partners have agreed that the reduced qualifying period of six months would be enough for companies to assess the employee’s suitability for the job, without forcing employers to accept shorter periods which would deter them from offering full-time employment to candidates whom they are doubtful of. There is no change for non-managers and executives for whom no minimum service period is prescribed.

Enhancement of the Employment Dispute Resolution Framework

Other Amendments to the EA

Apart from those above, other amendments include, extending the option of time-off for working on public holidays to employees, requiring employees’ written consent for salary deductions, and requiring employers to recognise medical certificates from all doctors for the purposes of paid sick leave, instead of only those issued by company/Government doctors.

Part 3: What I Hope to See Moving Forward?

While good progress has been made with this deck of amendments, I believe greater clarity and enhancements to the following areas would help lawyers and in-house counsels in this growing area of employment law.

First, I am particularly concerned about the need to provide greater clarity on the ambit of Section 18A of the EA, which allows employers to transfer employees in the transfer of business undertaking. There is a need for the formulation of a set of tripartite guidelines as well as FAQs on the scope of application of s 18A EA. The Minister has informed me in Parliament (during the Second Reading of the Bill) that the matter is being considered and can be done. In this regard, I urge the tripartite partners to work on this urgently, especially since this section now applies to all workers including PMEs earning more than S$4,500.

Second, more can be said and done, to support the transfer of jurisdiction of wrongful dismissals to the ECT, to ensure workers’ access to justice is not hampered. Through my interactions with the workers, some of them experience difficulties in filing their claims, as the ECT processes require submission of more forms and documents. We must provide the necessary support to workers, to ensure easy and expeditious access to justice. It is trite that justice not only must be done, it must also be seen to be done.

Third, with more cases at the ECT, I have submitted and appealed in parliament for decisions of the ECT to be published so that lawyers and practitioners alike can be better instructed and have a deeper understanding and appreciation of the rulings of the ECT. Administrative workload aside, perhaps the more landmark and instructive cases can be selectively published.

Fourth, I propose that stronger interventions be implemented to facilitate workers’ expeditious recovery of monies from their rogue employers in cases where workers have successfully obtained an ECT Order but unable to recover monies owing due to non or delayed payment by the company, or where the company is facing insolvency. It is therefore imperative to provide an even simpler, economical and expeditious enforcement mechanism to see through employers’ satisfaction of ECT awards/orders. One possible way (where the employer has become insolvent) is for MOM to advance money to pay part of the worker’s unpaid wages and stand in place of the worker as a preferred creditor of the same level of priority the workers would have had for paid or unpaid wages to recover the advance monies upon distribution of the insolvent companies’ assets. This reduces the waiting time for workers to be paid and eliminates the stress and hassle of administrative procedures associated with companies’ complex insolvency regimes and costly filing of claims.

Conclusion

While we have made good progress in advancing workers’ protection through this set of amendments, the labour movement and our tripartite partners will need to take a proactive approach to ensure that our local labour laws stay ready, relevant and resilient – ready for the future demographic/profile changes, relevant to protect all categories of workers of today and tomorrow, and resilient to withstand the test of time and transformation. We must never rest on our laurels and must continue to solider on as the livelihood of workers are at stake and the protection of the interests and welfare of workers is rudimentary – because every worker matters.

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